The Australian Securities and Investments Commission (ASIC) has commenced six civil penalty proceedings against Westpac after the bank allegedly incorrectly charged customers across various super, banking and wealth management companies.
ASIC stated the proceedings related to advice fees that were charged to deceased customers, inadequate fee disclosure, charging commissions for insurance inside super, duplicate charging of general insurance premiums, charging fees to deregistered company accounts and onselling debt at incorrect interest rates.
In regards to the fee-for-no-service claims, ASIC alleged Westpac and related entities charged more than $10 million in advice service fees to over 11,000 deceased customers over a 10-year period.
The regulator also alleged that in regards to inadequate fee disclosure, BT Financial Advice, Securitor and Magnitude – which are no longer in operation – charged more than $7 million in contribution fees for financial advice to at least 25,000 customers without the appropriate disclosure or no disclosure at all.
Additionally, it alleged Westpac subsidiary BT Funds Management (BTFM) charged superannuation fund members insurance premiums that included commission payments, despite commissions having been banned under the Future of Financial Advice reforms.
At the same time, some members also paid commissions to their adviser via premiums despite electing to remove the adviser component from their account and collectively BTFM will remediate more than $12 million to more than 8000 impacted members who have been incorrectly charged.
“ASIC is disappointed to have to yet again commence legal proceedings, on this occasion no fewer than six times, against a major bank. The conduct and breaches alleged in these proceedings caused widespread consumer harm and ranged across Westpac’s everyday banking, financial advice, superannuation and insurance businesses,” ASIC deputy chair Sarah Court said.
“A common aspect across these matters has been poor systems, poor processes and poor governance, which is suggestive of an overall poor compliance culture within Westpac at the relevant time.
“Customers are entitled to have trust and confidence in Westpac being able to deliver what it promises, without suffering financial harm. Westpac must urgently improve its systems and culture to ensure these systemic failures do not continue.
“It is unprecedented for ASIC to file multiple proceedings against the same respondent at the same time. However, these were exceptional circumstances. ASIC had numerous Westpac-related matters under investigation through the course of 2021 and we decided to expedite those matters for consideration by the court at the earliest opportunity.’
The Westpac entities subject to proceedings include Westpac Banking Corporation, Advance Asset Management Limited, Asgard Capital Management Limited, BT Funds Management Limited, BT Funds Management No 2 Limited, BT Portfolio Services Limited, Securitor Financial Group Pty Limited and Magnitude Group Pty Limited.
ASIC and Westpac will submit to the Federal Court that a penalty worth more than $100 million are appropriate. The bank has admitted the allegations and will remediate about $80 million to customers.
